Alaska Air Group Inc. has agreed to buy rival Hawaiian Holdings Inc.’s Hawaiian Airlines in a $1.9 billion deal to combine the two carriers, challenging the Biden administration’s aggressive stance on mergers that has already derailed one partnership.
Alaska will pay $18 per share in cash in a deal that includes about $900 million of Hawaiian’s debt, according to a statement Sunday. The offer is a significant premium to Hawaiian Holdings’ $4.86 closing share price on Friday.
The deal could provide a valuable lifeline to Hawaiian, whose stock has tumbled more than 52% this year. The company has been hurt by the slow return of tourism between Asia and Hawaii following the pandemic and a ramp up in growth in the Hawaii-to-US market by Southwest Airlines Co.
Alaska is taking on the acquisition despite the Justice Department filing a record number of challenges last year to corporate combinations and a pending antitrust challenge to a separate airline deal. A federal antitrust lawsuit over JetBlue Airways Group Inc.’s $3.8 billion cash takeover of Spirit Airlines Inc. is nearing a close.
Federal regulators earlier this year succeeded in breaking up an alliance in the northeastern US between JetBlue and American Airlines Group Inc., after a federal judge found the partnership gave the carriers too much power in certain markets and harmed consumers by raising fares and limiting choices.
It’s not Alaska’s first experience with an acquisition. The carrier outbid JetBlue to acquire Virgin America Inc. in 2016 for $2.6 billion in cash to extend a stretch of consolidation that had occurred across the industry.
The combination with Hawaiian will add to Alaska’s earnings within two years of closing and will produce annual run-rate savings of $235 million, according to the statement.
The acquisition must be approved by the boards of both airlines, Hawaiian Holdings shareholders and regulators. It’s expected to close in 12 to 18 months, the carriers said.